India is set to open applications for its flagship policy offering lower import duties to global electric vehicle makers in exchange for manufacturing in India, people familiar with the matter said.
The policy, that wasannouncedin March 2024, offers to slash duty to 15 percent on any imported electric car priced from $35,000 (roughly Rs. 29.8 lakh) if they invest at least Rs. 4,150 crore, or about $500 million (roughly Rs. 4,286 crore), to set up a local plant within three years. Up to 8,000 cars yearly can be imported at this reduced rate.
Applications for this may open as early as this month and extend till March 15 next year, according to people familiar with the discussions who did not want to be named.
The third-largest Asian economy is seeking to lure EV makers like Elon Musk-led Tesla Inc., which is gearingup to start sellingits cars to India after criticising the country’s high duties regime for years. India is still a market hotspot for EVs while demand is mellowing in other parts of the world. The new policy, if it draws industry giants, will also intensify competition for local automakers who currently dominate the EV segment.
While the broad outline is in line with what was announced last year, the people added that certain conditions have been tightened now with the Narendra Modi government to weed out non-serious players.
India has increased financial eligibility, mandating minimum revenue requirement of 50 billion rupees in the fourth year and roughly Rs. 7,500 crore a year later for any applicant approved under the policy. Those falling short will face a penalty of up to three percent on the revenue gap.
India’s Ministry of Heavy Industries did not immediately respond to an email seeking comments.
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